Earnings can be deducted from an income replacement policy, even if the insured receives the income without doing any work.
The appeal by the Saskatchewan Government Insurance ("SGI") from a decision of the Automobile Injury Appeal Commission (the "Commission") directing SGI to continue paying income replacement benefits to Epp, a farmer injured in a 1998 automobile accident, was allowed where the Court concluded that SGI was entitled to take into account income that Epp received from his partnership but did not actually earn by doing work.
\Saskatchewan Government Insurance v. Epp [2008] S.J. No. 800 Saskatchewan Court of Appeal J. Klebuc C.J.S., N.W. Sherstobitoff and J.G. Lane, JJ.A. December 15, 2008
Epp, a farmer, was injured in an automobile accident. He claimed and received Income Replacement Benefits ("IRB") under the "no-fault" provisions of the Automobile Accident Insurance Act, RSS 1978, c.A-35, on the basis that he was completely disabled from working. These benefits were to be based on the income lost as a result of the injuries sustained in the accident. Following the accident, family and friends did much of the work Epp was unable to do and did not charge for this work. As a result, in the years following the accident, Epp's income tax returns showed very little loss of farming income with the result that SGI decided to reduce his IRB. Epp appealed that decision to the Commission. The Commission held that SGI was not allowed to include any income not "earned" by Epp through his actual labour in computing Epp's gross yearly income for the purposes of considering a reduction in IRB. The Commission allowed Epp's appeal and directed SGI to recalculate the IRB accordingly. SGI appealed the decision of the Commission.
The Saskatchewan Court of Appeal allowed SGI's appeal noting that the Commission defined the word "earn" too narrowly. The Court found that in adopting this overly narrow definition, the Commission appeared to have overlooked or ignored the provisions of the Act and Regulations which spelled out exactly how business income from a self employment or partnership interest was to be calculated. After reviewing the relevant provisions of the Act and Regulations, the Court held that nothing suggested or supported the restricted meaning of "earn" or "income" used by the Commission in coming to its decision. In the result, the Court allowed the appeal. In obiter, the Court noted that if Epp had either paid or agreed to pay the persons who provided the work and services without compensation, the decision may have been otherwise.
This case was originally summarized by jmeadows@harpergrey.com and originally edited by dpilley@harpergrey.com
